European clubs report record losses

UEFA has again stressed the necessity of its financial fair play (FFP) regulations after detailing that the losses of European clubs increased to a record Eur1.7 billion in 2011, reports SportBusiness.

UEFA has again stressed the necessity of its financial fair play (FFP) regulations after detailing that the losses of European clubs increased to a record Eur1.7 billion in 2011, reports SportBusiness.

The statistic came as UEFA issued its fifth club licensing benchmarking report on European club football, analysing more than 670 top-division clubs from its 53 full member national associations.

While UEFA stated that football revenues remain buoyant, with overall Europe-wide top-division revenues of Eur13.2 billion in 2011 representing growth of 24% since 2007, it maintained this increase is being outstripped by spending.

Club costs, in particular salaries and their associated costs, have increased by a huge 38% to Eur8.6 billion between 2007 and 2011. Combined employee and net transfer costs now represent 71% of club revenues, a significant increase from 62% in 2007.

UEFA’s analysis details that the worsening results have been reflected at all levels of the game.

While the losses of the 10 largest loss making clubs increased by Eur260 million between 2007 and 2011, the financial results of clubs with losses ranked 11-30 deteriorated by Eur310 million, and other smaller loss-making clubs also reported more than a doubling of their losses during this period.

The FFP rules permit clubs to have a maximum loss of Eur5 million, rising to Eur45 million if covered by an equity contribution, over two years through 2013.

The assessment period will be increased to three years for future seasons, but UEFA stated a simulation of financial results covering the period 2009-11 would have seen 14 clubs competing in European tournaments this season exceed the Eur45 million limit.

Another 32 teams would have reported cumulative losses of between Eur5 and Eur45 million. The rules do not come into full effect until the 2013-14 season.

Commenting on the report, UEFA president Michel Platini said: “Numerous football clubs, including some prestigious ones, have experienced severe financial difficulties, leading to top division clubs’ aggregate losses increasing again.

“In this context, the unanimous consensus among the whole football family on the financial fair play concept becomes key in order to face the anticipated financial distress that other clubs are expected to suffer in the future.

“Keeping costs under control and within sustainable limits is and will continue to be the clubs’ biggest challenge. Sustainability of the entire football sector is hence at the centre of the financial fair play philosophy, aimed at balancing revenues with expenses and at boosting investments for the long-term health of the game.”

 
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